Impact of Multiple Taxation on Manufacturers in Nigeria and Participation in AfCFTA Agreement

Manufacturers in Nigeria are facing a tough battle against multiple taxation, hindering their operations and competitiveness in the global market. The Manufacturers Association of Nigeria (MAN) has raised concerns about the impact of overlapping taxes on the profitability of manufacturers, especially in light of their participation in the African Continental Free Trade Area (AfCFTA) agreement.

Segun Ajayi-Kadir, director general of MAN, highlighted the challenges faced by manufacturers due to increased taxation at the federal, state, and local levels. The imposition of multiple taxes has created compliance burdens, operational inefficiencies, and reduced profitability for manufacturers, ultimately hindering investment incentives and eroding profit margins.

A survey conducted by MAN revealed numerous taxes with overlapping effects, adding complexity and burden to businesses. Sales tax, Value Added Tax (VAT), mobile advertising charges, education levies, tenement rates, Land use charges, and parking fees are among the taxes contributing to the financial burdens faced by manufacturers.

The competitiveness of Nigerian manufacturers in the global trading environment has declined due to the multitude of taxes, potentially hindering their ability to maximize gains in the AfCFTA. MAN is calling on the government to review statutory requirements, legal frameworks, and tax laws to create a more enabling business environment and eradicate the multiplicity of taxes.

Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), echoed the concerns of manufacturers, emphasizing the need for a sustainable business environment. He highlighted challenges such as high energy costs, logistics costs, supply chain issues, forex volatility, and customs duty exchanges, urging the government to address these issues to support the growth of the manufacturing sector.

In response, Matthew Gbojubola, coordinating director of the Federal Inland Revenue Service (FIRS), reassured that efforts were underway to simplify tax laws and ensure easy compliance for businesses. The government aims to strike a balance between generating tax revenue and creating a conducive operating environment for businesses to thrive.

As manufacturers continue to grapple with the impact of multiple taxation, stakeholders are calling for collaborative efforts to address these challenges and support the growth of the manufacturing sector in Nigeria.